After months of discussion, appears ready to pull the trigger on establishing another final assembly line (FAL), this time in the U.S.
That the company has continued internal discussions about expanding its Mobile, Ala., engineering facility to a production site was highlighted in March by thenCFO Hans-Peter Ring, who confirmed continued contact with local officials. Mobile was to be the final assembly site if the U.S. Air Force selected the -based tanker in its KC-X program. It did not, and the A330 FAL concept disappeared.
Industry officials now say the focus on the A320 final assembly line will be on the narrowbody segment, in light of the huge replacement demand in the U.S. Airbus has about 20% narrowbody market share in North America, compared to 50% globally; the company hopes a final assembly site will sway U.S. airlines to buy the European aircraft.
Mobile would become the fourth A320 final assembly line in addition to Hamburg, Toulouse and Tianjin, China.
Jeffery Smisek, president and CEO of United Continental Holdings, says he can “understand the reason for Airbus to do this” [going into Mobile]. But he cautions that “it is not particularly important to us” where the aircraft are built. “We buy products all around the world.”
United is facing a big narrowbody replacement need and has been looking at an order for the A320NEO or theMAX, in part to replace 92 -200s.
The move would be one of the first signs the new EADS/Airbus leadership team of Tom Enders and Fabrice Bregier will move more aggressively on key strategic issues; expansion to the U.S. had long been in the plan under prior EADS CEO Louis Gallois, but pulling the trigger proved difficult. An assembly line at Mobile also would underline that Bregier is willing to sacrifice margin for strategy, if the cause is important enough. The A320 FAL in Tianjin is still operating at higher unit costs than Hamburg and Toulouse. Tianjin is on its way to build four A320s per month by the end of this year.
Details of the plan are due to be revealed before the Farnborough air show begins on July 9, including when the FAL should be up-and-running and if it will build just A320NEOs, the new engine option aircraft coming online in 2015, or also current generation single-aisles.
Airbus is on a path to building 42 A320 family aircraft a month and is expected to go higher once the NEO comes online.
Airbus has started negotiations with its Chinese partners about extending the agreement for the Tianjin line beyond 2016, when it is scheduled to expire. If the extension is agreed on, than “the NEO automatically comes into play” for production in Tianjin, Airbus China President Laurence Barron said earlier this month.